Canadian Music Rights Company Acquires Royalty Collection Startup

Audiam, a company that collects missing streaming royalties for songwriters such as Bob Dylan, James Taylor and Metallica, has been acquired by a Canadian performing rights group.

The Society of Composers, Authors and Music Publishers of Canada, whose clients include star acts from R&B's the Weeknd to rock band Nickelback, bought Audiam as part of its effort to more efficiently identify its clients' compositions when they are played on digital services such as Spotify AB, Apple Inc.'s Apple Music, Pandora Media Inc. and Alphabet Inc.'s YouTube—and to pay them for all such instances.

While a few decades ago performing-rights groups were responsible for collecting royalties on a few hundred thousand performances a year, there are now hundreds of billions of live and streamed performances to cash in on in the digital era, said SOCAN's chief executive, Eric Baptiste. Audiam's technology and growing database of copyright-ownership information will help SOCAN keep track of it all, he said.

Both companies declined to disclose the terms of the deal, but Audiam's founder, Jeff Price, said that Audiam's investors—including singer Jimmy Buffett and Marc Geiger, the head of the music department at the William Morris Endeavor talent agency—will get a return on their investment.

Mr. Price co-founded Audiam in 2013 after he and other executives were pushed out of TuneCore, a company Mr. Price co-founded to help artists and labels distribute music to digital-music stores. The aim of Audiam was to help songwriters and publishers collect so-called mechanical royalties from music-streaming services—the same type of royalties songwriters get from sales of CDs and vinyl records. (Performing rights groups such as SOCAN, Broadcast Music Inc. and the American Society of Composers, Authors and Publishers collect separate payments, known as performance royalties, from streaming services as well as radio stations and live venues; the purchase of Audiam represents SOCAN's foray into mechanical royalty collection.)

After combing through the catalogs of some of his clients and identifying all the recordings ever made of their songs, Mr. Price said he discovered that most streaming services were paying mechanical royalties to his clients on only a fraction of those recordings containing their works—even some that the songwriters such as Bob Dylan had performed themselves.

Others have noticed a similar trend. Nearly eight months ago Spotify—the largest subscription streaming service with at least 100 million total users—was hit with two songwriter-led lawsuits filed in U.S. District Court in Los Angeles seeking class-action status over alleged copyright infringement, which have since been combined into one suit.

In March, Spotify struck a deal with the National Music Publishers Association that makes it easier for publishers to claim royalties they are owed, if they agreed not to join the suit or make new copyright-infringement claims against the service. Spotify has millions of dollars on reserve for "unmatched works" of which it doesn't know the owners, because of missing data in its system, but has said it wants to pay and is building a better system to do so.

Mr. Price said the fact that Spotify is missing ownership data indicates that the works weren't properly licensed in the first place. Spotify declined to comment.

He said would continue to serve as chief executive of Audiam while servicing his existing clients as usual. With a new "parent organization whose sole purpose in life is to ensure people are getting paid," he said, "I'll have more leverage to compel [streaming services] to do the right thing."

Write to Hannah Karp at [e-mail]

(END) Dow Jones Newswires

July 20, 2016 22:25 ET (02:25 GMT)

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